Plan 2 Prosper

There has been strong growth in real property investment by self managed super funds (SMSF’s). Many funds hold such property as their only substantial asset – a position which has the potential to cause material difficulty should a benefit payment or rollover to another fund suddenly be required, such as upon an irreconcilable family breakdown (divorce), sudden death or major disability of a member.

For trustees of SMSFs, managing your own fund and getting it right is very important. There are many rules and regulations in the various laws that govern super that are designed to protect your retirement income. As a trustee, you need to adhere to the rules and know that you are ultimately responsible for the running of the fund, even if you use tax, financial and super professionals to help to manage it.

Statistics regarding death and illness are often quoted when advisers tell clients about the need to establish life, TPD, trauma or other risk cover. These same statistics can be quoted in support of the need to maintain liquidity in a SMSF. As with risk cover, the purpose of liquidity is to be prepared for the unexpected, such as death or sudden illness, rather than death in accordance with current actuarial life expectancy table.

Life is uncertain, and SMSF Trustees need to be prepared for the unexpected by retaining a reasonable portion of SMSF assets in liquid assets. (more…)

Today’s twenty something generation – Generation-Y or Gen-Y as they’re known – are renowned for being optimistic go-getters. Born between 1976 and 1991, these children of baby boomers are often described as being unrealistically optimistic and over-confident about life, particularly around financial matters.

Perceptions are often reality …

Gen-Y are perceived as being happy to rely on ‘Bank Boomer, ‘Family ATM’, ‘The M&D Bank’ to prop up their lifestyle, especially during this economic downturn. With tags such as ‘helicopter kids’, ‘Kidults’ and ‘boomerang kids’, who just keep coming back to their parents for further assistance, Gen-Y are fast becoming “Kids In Parents Pockets Eroding Retirement Savings” – KIPPERS. In the past, our Baby Boomer parents were pretty confident that they could sustain not only their lifestyle but, if things went wrong with their Gen-Y sons and daughters, that they could also help them out. Sadly, for many that confidence is gone, and is no longer a practical reality.

By nature of the year of my birth, I am a member of Gen-Y (only just).

Unlike previous generations, such as our baby boomer parents, credit has been all too readily available and we stand accused of failing to understand the ramifications of our spending habits and potential impact of escalated debt levels, particularly given the effects of the global financial crisis.

Recognised by many as the driving force for tomorrow’s economy, many of our number are financially uneducated and paralysed by debt. Gen-Y has its fair share of entrepreneurs and many have, or are looking to, start their own business. Basic budgeting, business planning and accounting advice will be beneficial in this respect to provide that initial foundation on which to build a sustainable business.

Now with increased unemployment and vulnerability in the economy, Gen-Y has received a much needed wake -up call. It’s great that this wake-up call has been received now, rather than in our early 40 and 50′s … much more time is on our side … I urge you now to take action and review or rethink your current and future financial strategies. I only hope you (Gen-Y) were listening when the wake-up call came and didn’t rollover for another sleep. (more…)